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Eagan Company has three product lines, A, B, and C. The following information is available: A B C Sales $ 30,000 $ 19,000 $ 10,500

Eagan Company has three product lines, A, B, and C. The following information is available:

A B C
Sales $ 30,000 $ 19,000 $ 10,500
Variable costs 19,000 10,500 7,500
Contribution margin $ 11,000 $ 8,500 $ 3,000
Fixed costs:
Avoidable 5,000 4,500 1,000
Unavoidable 2,500 6,000 750
Operating income $ 3,500 $ (2,000) $ 1,250

Assume that product line B is discontinued and replaced with product line C. This will triple the production and sales of product line C without increasing fixed costs. Operating income will __________.

The answer key says that "increase $2,000" is the correct answer. Can you please thoroughly explain why this is the correct answer? If line B is dropped, will line A and C or just line C be operational? Will the variable costs of line C triple? Will the company still have to pay the unavoidable fixed costs of line B?

Thank you.

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